Apple Reports Record Services Revenue of $12.5 Billion — Buoyed In Part by Apple Music

Apple Reports Record Services Revenue While Topping Earnings Estimates
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Apple just released its 4th quarter financials for the period ending September 30, in which services such as Apple Music generated a record $12.5 billion in revenue.

Services revenue at the company increased a whopping 18% over the same period in 2018. These services include the following:

  • Apple Music
  • App Store
  • Apple Pay
  • iCloud

On Friday, Apple will also launch Apple TV+, which is a premium video streaming service. Priced at $4.99 per month, the service will be available in more than 100 countries. Those who buy a new iPhone, iPad, Apple TV, Mac or iPod Touch can receive 12 months of the service for free.

Already, Apple is bundling TV+ with Music, likely the first of many combo deals.

Overall, revenue at Apple increased a modest 1.8% to $64 billion while net income actually fell 3.1% to $13.69 billion, with an earnings per share of $3.03. These numbers easily beat Wall Street estimates of $62.99 billion in earnings with an earnings per share of $2.84.

While revenue for services soared at the company, sales of iPhones declined significantly. Sales were down 9% over the same period last year to $33.36 billion. But this was still better than the $32.77 billion in revenues that was estimated as well as better than the 15% decline in sales the company experienced in the previous 3 quarters.

Apple is betting big on TV+.

During an earnings call, analysts asked company CEO Tim Cook about the rationale for giving away 12 free months of TV+, especially as some believe it could considerably affect earnings. While at first he said, “It’s a gift to our users,” Cook also admitted that they had a clear business strategy in making the offer. He said that it “allows us to maximize subscribers in the early going.”

Analysts also questioned the company’s strategy of only offering a limited amount of content, particularly in comparison to competitors such as Netflix. Cook, though, insisted that this was actually a positive feature of their platform, as he said that TV+ was “the first all-original video subscription service.”

The service will launch with 9 shows, which so far have received lackluster reviews.